This paper identifies important opportunities linked to growing local and regional demand, and what constraints exist for their exploitation. It identifies several areas of untapped, substantial opportunities for Zambia's manufacturing sector. While Zambia's competitiveness in global markets is challenged by macroeconomic factors (fluctuating exchange rates, real exchange rate appreciation) and structural bottlenecks (transportation costs, infrastructural services), all of which will require ambitious policy interventions and long-term investment (roads and railways rehabilitation and construction, electricity, internet connectivity), there are more immediate opportunities that are available in addition to its focus on copper beneficiation. These opportunities include strengthening linkages to urban demand for processed food, increasingly structured around supermarket retail chains, and to copper mining demand for goods and services. Opportunities also exist for suppliers to the mining industry as copper mining companies require a local supply chain capable of providing value added services and products, at reasonable prices and within short lead times.

Year2015

OrganisationCentre for Competition, Regulation and Economic Development (CCRED) University of Johannesburg

Policy Paper prepared for the Economic Development Department and the Department of Trade and Industry

The impact of electricity price increases on the competitiveness of selected mining sector and smelting value chains in South Africa: Has it incentivised mining-related companies to invest in renewable energy, cogeneration and energy efficiency?

This research project was jointly commissioned by the Economic Development Department (EDD) and the Department of Trade and Industry (the dti). The Global Green Growth Institute (GGGI) was tasked with implementing the project as part of a partnership to support the South African government's green growth planning efforts. TIPS was the primary research partner and service provider. This project is the result of the collaboration of all of these institutions.

The South African government's Inter-departmental Green Growth Committee, chaired by EDD, served as the project steering committee for this research. A multi-stakeholder Technical Reference Group was also established to offer inputs on various drafts of the report.

This policy paper represents a condensed version of an earlier report, which was the result of extensive fieldwork and interviews with stakeholders across the selected mining value chains. The research team comprised Reena Das Nair, Dinga Fatman, Evans Chinembiri, Gaylor Montmasson-Clair, Georgina Ryan and Wendy Nyakabawo of TIPS. Gaylor Montmasson-Clair and Georgina Ryan were the lead authors of the policy paper. Alison Goldstuck and Katlego Moilwa were GGGI contributing authors.

Although not directly associated with the transition to a green growth path, recent trends in South Africa's electricity supply industry, which has been characterised by energy supply problems since a load shedding crisis in 2008 and drastic price increases (i.e. a trebling of the average electricity price from 2009/2010 to 2017/2018), provide an opportunity to investigate the shift to a greener path. Using these developments as an entry point, this paper investigates the impact of electricity price increases on the competitiveness of mining-related companies and the mitigation measures which have been implemented by various firms in the four most important mining value chains in South Africa, namely platinum, gold, iron ore and coal. Particular attention is paid to the role that electricity price increases and energy security concerns have played in fostering investments by mining-related firms in renewable energy and energy efficiency.

For any enquiries related to the report that are relevant to the dti and EDD, please contact Christian Prins, Economist (macro economic policy), EDD, at cprins@economic.gov.za.

The purpose of this paper is two-fold. First it is to review Botswana's competitiveness policy in the 10th National Development Plan, (NDP10 -2009-2016), National Export Strategy (2010-2016) and what are its conceptual foundations in the works of Michael Porter (1990). This will help explain the direction of trade and development policy in a small landlocked country like Botswana. The second purpose of the study is to review the actual experience of several non-traditional manufacturing exporters (i.e. outside the textile and motor vehicle industry) and to see what their experience has been and whether the current export strategy will facilitate their competitiveness and survival in Botswana's challenging commercial context. The five firms reviewed in this paper, represent numerically approximately one third of the firms in the non-traditional export sector. The sector is very small and is likely only to become smaller as the existence of this sector is in many ways the product of an earlier period when there was more government intervention in the development of exports. The analysis of the firms is qualitative in nature as firms were understandably unwilling to provide cost and revenue data and there were an insufficient number of firms for any serious quantitative analysis. The research focuses on the main concerns of the firms in sustaining their position in the export sector. In some cases this stems from the costs of transport, smallness and in others from decisions of government in terms of development policy and its application.

The paper will consider whether there is anything in the current competitiveness strategy that will assist firms in meeting the challenges of production in a small landlocked country like Botswana. It will be argued that the strategy and the actual commercial needs of most of the firms surveyed are disconnected as the export strategy is focused on a view of export development which is in appropriate given the actual level of private sector development in Botswana. Moreover, the policy is internally contradictory. Like most resource rich countries Botswana's principle policy direction for diversification is beneficiation which lies at the very heart of national and regional trade policy. It fails to focus on the question of how beneficiation of raw materials is to proceed in light of the current electricity and energy policy which lies at the core as to why firms in Botswana beneficiate minerals abroad. Thus the approach taken in this paper is essentially commercial, considering the actual cost and availability constraints that firms face.

In this paper we analyze the relationships between exchange rates, inflation and competitiveness. We show that over the 1994-2006 sample period real exchange rate depreciations did not improve the trade balance and therefore had no positive effect on growth. One reason is that SA exports are priced to market (PTM instead of PCP). We also comment on the policy advice of the International Panel of Experts on Growth (The 'Harvard Team') on South Africa's Accelerated and Shared Growth Initiative (ASGISA) with respect to the present architecture of SA's inflation targeting regime. Rodrik (2006) argues that since the health and vitality of the formal manufacturing sector has to be at the core of any strategy of shared growth, the South African Reserve Bank (SARB) should switch to a modified inflation targeting framework which allows considerations of competitiveness to affect its decisionmaking. We argue against this. Instead we show that if the monetary authorities would be interested in targeting competitiveness via the real exchange rate, a good way to do this is by narrowing the present inflation targeting band from the present 3- 6 percent, to say 1-3 percent.

There are fundamental links between academic treatments of 'economic development' and of the popular policy discourse of 'competitiveness'. Productivity-focused analyses of competitiveness are inherently related to market-centric analyses of development that have economic growth as their objective. However, a consensus is emerging on the need for broader conceptions of economic progress, built in particular on recognition of: (i) the inconsistency of short-term, unconditional growth with environmental sustainability; and (ii) the complexity of relationships between income, other socio-economic factors and actual well-being. This paper argues that moving 'beyond income' has implications for competitiveness discourse. Understanding the drivers of productivity will remain a key concern, as income will remain a core component of economic development. However, there is a danger that the dominance of a narrow, marketfocused competitiveness discourse will continue to skew policy. The paper argues that the very popularity of the competitiveness concept among policy-makers in fact presents an opportunity: broader conceptualisations may facilitate the integration into policy of wider socio-economic concerns. Analysis of the contested competitiveness concept is combined with reflection on recent advances in the measurement of economic progress in proposing the necessary reconceptualisation of competitiveness for today's economic development challenges.

This document has two objectives. First, it endeavours to capture the domestic clothing sectors major market and production trends, as well as broader dynamics. Second, these foundational elements operate as a mechanism to identify current clothing sector constraints and opportunities and hence the need for, and the importance of, policy related interventions. Given its objectives, the document comprises six sections. Section 1 provides an overview of the sectors major trends as gleaned from TIPS data, whilst Section 2 reviews the sectors structure in respect of various criteria. Section 3 explores market trends and competitiveness related issues, with Section 4 then exploring the international and government policy framework in which the industry operates. Section 5 attempts to synthesise the constraints and challenges confronting the sector, with Section 6 then considering the policy implications and opportunities arising from the analysis. These last two sections represent the core of the document insofar as they build on the findings generated out of the 2004 TIPS study (out of which this document is largely derived), and present the major strategic recommendation to have emerged out of the recently completed CSP research undertaken by B&M Analysts on behalf of the dti.

Understanding firm competitiveness and product development is crucial to industrial development. The plastics sector provides a good case in which to explore these issues. The plastics sector has been one of the better performing sectors in recent years in terms of output and employment. Plastic products are increasingly replacing metal products, thus placing the plastics sector at the core of manufacturing. There are constant developments related to the properties of materials such as rigidity, colour and flammability. Hence it is vital for firms to adapt, combine and develop capabilities to establish new products and markets. These factors require downstream firms to align their technological capabilities and dynamics to meet such sector specific and international challenges. The paper assessed different dimensions of firms competitiveness and capabilities, including technological capabilities, investment decisions and skills development. It finds that the firms that are engaging product development and industrial restructuring through upgrading or re-organisation of their production processes tend to be more competitive and were growing. The paper also highlights actions required in order to upgrade and re-organise production processes, including appropriate government policies.

The last few years have witnessed two major shifts in global trading and industrialisation patterns. The first is the rise of China (with the South East Asian region in tow) as the dominant force reshaping the relations between developing and developed countries as well as the competitive dynamics within the developing world. One can no longer speak of a developing world as if it was not highly differentiated and contradictory. The second, of major significance only in respect of Africa, is most exemplified in the rapid rise of a clothing industry sector in selected countries (amongst which Madagascar has been prominent) in Sub-Saharan Africa, primarily through the impact of the African Growth and Opportunities Act. Whilst perhaps of insignificance on a global scale, the possibilities it has opened up for wage employment and rising income for significant numbers of workers on the continent is not to be dismissed. However, the end of the Multi-Fibre Agreement and the massive impact of China on the global dispersion of clothing production, threatens to substantially disrupt these processes. It is to this end that we undertook a study of the dynamics operative in the Madagascar clothing industry.

Year2005

Publication Author(s)Mike Morris and Leanne Sedowski

Countries and RegionsCommon Market for Eastern and Southern Africa (Comesa)

Pricing tradable goods in the domestic market at import parity is evaluated to determine whether it can be characterized as a competitive constraint on pricing, or as a source of market power. The policy of import parity pricing (IPP) is also assessed in terms of the South African Competition Act. Because IPP depends on so many variables, its effects are uneven across sectors and it so is difficult to condemn outright or to address via a policy measure.

As liberalization and globalization gather pace, concern with industrial competitiveness is growing, not just in developing countries but also in mature industrial ones. But it is the former that face the most intense competitive pressures: many find that their enterprises are unable to cope with rigours of open markets in exporting and in competing with imports as they open their economies. Some countries are doing very well; the problem is that many are not. Diverging industrial competitiveness in the developing world is one of the basic causes of the growing disparities in income that are now a pervasive feature of the world scene. The immense potential that globalization offers for industrial growth is being tapped by a relatively number of countries, while liberalization is driving the wedge deeper.

Year2004

Publication Author(s)Sanjaya Lall

Countries and RegionsEast African Community (EAC), European Union (EU), Southern African Development Community (SADC)

Competition policy is part of the new international orthodoxy in economic policy and, at the same time, was viewed in South Africa as a crucial element of economic transformation. This article reviews the role of competition policy in economic development and the experiences of developing countries such as Brazil and South Korea. It then assesses the effects of competition policy in South Africa after 1994, with the main focus being on the performance of the new competition institutions established in 1999. The case of the steel industry is used to assess the approach and impact of the institutions in a concentrated sector that has simultaneously undergone processes of liberalisation and domestic consolidation.

The opening-up of the economy through trade liberalisation has also seen increased concentration in many sectors. This is a result of consolidation, with inefficient firms closing down or being taken over, and of closer focus by companies on their core activities. Economies-of-scale arguments have also been used in several sectors to support mergers and acquisitions.

This article focuses on three key groups of issues. First, it briefly discusses the role of competition policy in economic development and in developing countries. Secondly, it examines the ways in which competition measures have been applied in practice in South Africa and the development of the institutions under the 1998 Competition Act (South Africa, 1998) compared with the old Competition Board. Thirdly, it analyses recent cases and current competition issues in the steel sector to explore the issues of industrial development and competition policy in more detail.

Since 1994, the South African economy has undergone significant changes with the government implementing various policies aimed at redressing the injustices of the past, fleshing out the welfare system and improving competitiveness as South Africa becomes increasingly integrated into the global economy. These policies have, directly or indirectly, impacted on the labour market and, consequently, on the lives of millions of South Africans.This paper's chief objective is the analysis of some of the changes in the South African labour market in the post-apartheid era. The period, between 1995 and 2002, began with much promise and many challenges as the economy liberalised and normal trade relations were resumed with the rest of the world.Soon after the African National Congress came into power, the macro-economic strategy named 'Growth, Employment and Redistribution'(or GEAR) was unveiled in 1996. This strategy predicted, amongst other things, employment growth averaging 270 000 jobs per annum from 1996 to 2000, with the number of new jobs created rising over time from 126 000 in 1996 to 409 000 in 2000 (GEAR 1996).Unfortunately, for a variety of reasons, these projections were not realised. In fact, in terms of the labour market,the experience of the second half of the 1990s appears to have fallen short of even the baseline scenario contained in the GEAR document, which projected a net increase in (non-agricultural formal)employment of slightly more than 100 000 jobs per annum.

The international commodity market is increasingly characterized by a fall in the relative value of products mainly due to increased competition. Because of the competitive pressures in the global market place, it is not surprising that exporters from economies that rely relatively more for their well being on the export of commodities such as agricultural products and processed foods, are seeking to market their products by making them more identifiable and interesting in international markets, using distinctive, inventive and creative labelling and branding to appeal to consumers. This is supposed to enable stronger marketing of distinctive or traditional regional products, especially agricultural and processed foods, and to preserve a strong and distinctive market presence on the international markets. It is thought that, for example, tea or coffee is more valuable if sold under a distinctive mark than it would be if sold as bulk, and that its value in the eyes of the consumer may be enhanced by the use of descriptive or laudatory terms such as 'from the mountains of.' The envisaged economic benefit of geographical indications is their role as marks of quality, a factor thought to play a part in enhancing export markets and revenues. The question of the protection of geographical indications is therefore a trade issue on which positions taken reflect trade interests.

This report was prepared for National Treasury to support its assessment of administered prices in South Africa. The objective of the study was to assess the processes involved in setting prices in regulated industries. By evaluating the efficiency, effectiveness and analytical rigour of the regulatory processes involved in setting prices for the services involved, an assessment can be made of the likelihood that the resultant tariffs approach efficient levels. Volume I of the report sets out the main findings and recommendations with supporting information relating to the individual sectors included within the scope of the study provided in a summarised form. Volume II contains more detailed sectoral reports, covering individual review of the water, electricity, telecommunications, transport, health and education sectors.

The report does not offer a detailed quantitative assessment of the performance of the regulatory regime, and is largely based on in-depth interviews and documentary analysis. The authors would like to thank the interviewees for their cooperation and valuable insights. Although much care was taken to provide a correct reflection of the opinions expressed, the authors remain entirely responsible for any inaccuracies. The project was coordinated by Trade and Industrial Policy Strategies (TIPS) and generous funding of the project was provided by DFID, as part of its Support for Restructuring of State-Owned Enterprises in South Africa Project.

The links between BEE and competition policy are outlined in the Competition Act of 1998. It is recognised in the preamble to the Act that competition law has to specifically address the excessive concentration of ownership and control of the economy and the unjust restrictions on the full participation of black people in the economy that arose from the various Apartheid laws. Thus, the Act allows for exemptions from the provisions on anti-competitive practices where such practices promote the ability of black-owned and controlled enterprises to become competitive. Furthermore, decisions on mergers on public interest grounds made by the Competition Commission and Tribunal take into account the effect that the merger will have on the ability of black small businesses or firms to become competitive.

Although the objectives of competition policy seem very clear in theory, it is unclear what has been happening in practice. The paper aims firstly to look at the effect accepted BEE policies have had on the application of competition legislation. A critique of the relationship between the two will be undertaken and finally recommendations will be made on how practice can be modified to match more closely with theory. The methodology that will be used will include a literature review as well as an analysis of relevant cases that have been brought before the competition authorities.

Competition policy is part of the new international orthodoxy in economic policy and, at the same time, was viewed in South Africa as a crucial element of economic transformation. This article reviews the role of competition policy in economic development and the experiences of developing countries such as Brazil and South Korea. It then assesses the effects of competition policy in South Africa after 1994, with the main focus being on the performance of the new competition institutions established in 1999. The case of the steel industry is used to assess the approach and impact of the institutions in a concentrated sector that has simultaneously undergone processes of liberalisation and domestic consolidation.

This paper provides an overview of the interconnectedness between trade, competition and investment in SADC, and explores the competition implications emerging therefrom. From a review of existing competition policy in SADC, key national and regional competition challenges are examined, with a view to suggesting options for regional collaboration to address these issues.

The government's Integrated Manufacturing Strategy identifies competitiveness as its primary focus, and value-matrices as the framework within which to assess manufacturing performance. This paper addresses these issues through two main components. The first is a review of interpretations of competitiveness and its determinants. The second is an assessment of South African manufacturing performance in a comparative context. This makes reference to recent studies of manufacturing sub-sectors, and draws comparisons with the performance of other developing countries. Drawing on the analysis, implications are discussed for the government's industrial policy framework and the use of a value matrix methodology.